“Tax burden's on homeowners after Prop. 13” plus 3 more |
- Tax burden's on homeowners after Prop. 13
- House Prices Down, Property Taxes . . .Up?
- Property tax bills to have new look
- College schedules public meeting on property tax rate
| Tax burden's on homeowners after Prop. 13 Posted: 28 May 2010 03:02 AM PDT
But by 2009-10, residential property owners were shouldering much more of the burden - 72 percent of property taxes - while businesses were shouldering much less of the burden - just 28 percent, according to a provocative new study by the California Tax Reform Association (CTRA) and friends. (You can read the whole report here: SystemFailureFinalReportMay2010.) "The stated purpose of most property tax protections which occur in most states, particularly including Proposition 13 in California, is to protect homeowners and residential property," the report says. "Thus if those policies are meeting their purpose, one might expect a shifting away from residential property and a greater burden on commercial/industrial property or, making certain assumptions about growth patterns, at least a constant share for residential property where the intent of the law is to protect residential property. "In fact, a consistent shift of the property tax burden away from commercial/industrial/other property and towards residential property has occurred in virtually every county in the state." These charts illustrate the changes in OC:
"As California faces a severe fiscal crisis at the state and local level, all aspects of our tax system, including the property tax, must be examined," it continues. "This report provides an examination of the property tax system as it applies to commercial property, and provides significant new data which comes to two clear and related conclusions: OC doesn't even have the worst of it. In Contra Costa County the residential share of the property tax went from 48 percent to 73 percent; in Santa Clara County, the residential share went from 50 percent to 64 percent ("despite massive industrial/commercial growth"); and in Los Angeles County, it went from 53 percent to 69 percent. "With regard to the question: how has the burden of the property tax changed in the last 30 years? The answer is: it has shifted markedly away from the commercial sector and towards the residential sector," the report says. PROPERTY TAX PRIMER P rop. 13. Nearly every adult in California in 1978 had a strong opinion about it. An overwhelming number embraced its intentions to cut property taxes and limit their growth — and weren't troubled about the gloom-and-doom forecasts of critics, who said the initiative would cripple schools and hobble government. The amendment to California's Constitution rolled back property values on existing parcels to 1975 levels, reduced and fixed the assessment rate and capped future increases to 2 percent a year. Prop. 13 has resulted in the odd specter of next-door-neighbors in nearly identical houses paying vastly different property taxes for the exact same services – thanks to when they bought their homes. A Register review of a Fullerton tract in recent years found old-timers paying as little as $400 a year in property taxes, while the newcomers paid more than $3,000. They were all getting the same trash pickup service. Property is re-valued - or "reassessed" - for tax purposes whenever it changes ownership. That's supposed to hold true for commercial as well as residential property. But while it's pretty easy to see when a home changes hands, it's not always so simple to see when you're talking about businesses. LOOPHOLES GALORE "The system by which commercial property is assessed is irrational, loophole-ridden, complex, increases assessment on some properties while allowing others to escape reassessment, and generally is incapable of being defended as rational public policy," it says. "While business groups defend the outcome—very low property taxes for many businesses—we challenge anyone to defend the confused and confusing system which treats similar commercial properties very differently, depending on how they are organized. "Despite the complexities of property ownership, the problem in the law can be simply understood: a change of ownership does not occur unless over 50% of a property is purchased by a single owner. So if three purchasers purchase 100% of a property, no change of ownership occurs. If stock transactions for a publicly-traded corporation occur every day and 95% of the company changes hands over time, but no one purchaser buys more than 50% of stock, no change of ownership occurs. If limited partners who own a shopping center sell to several other limited partners, no change of ownership occurs if no one buys more than 50%. If two private equity firms and a real estate investment trust each buy an entire company, no change of ownership occurs. Or, if a change in company ownership occurs, but the property is held through a leasehold, no change of ownership for the property occurs." And thus, business property taxes can stay at low, low, low levels. "There can be no doubt that Proposition 13 greatly lowered the property tax burden on average in California, despite far higher land values than the rest of the country," the report says. "In 1977-78, California ranked 5th in the country in property tax as a percentage of personal income, at $63.47 in tax per $1000 of income, compared to a national average of $43.74. "In 2006-07, California ranked 36th in percentage of personal income, paying on average $27.61 per $1,000 of personal income, compared to a national average of $34.92 …. "With the property tax burden cut by more than half from the pre-Proposition 13 level, the question becomes how the lowered tax burden has been shared." An interesting question, indeed. Next week, we'll delve more into the business end of things, including a look at the property taxes paid by Disneyland, and some fixes that would preserve Prop. 13's protections for homeowners, but hold businesses' feet to the fire. More Watchdog: More taxes: Five Filters featured article: The Art of Looking Prime Ministerial - The 2010 UK General Election. Available tools: PDF Newspaper, Full Text RSS, Term Extraction. |
| House Prices Down, Property Taxes . . .Up? Posted: 28 May 2010 09:47 AM PDT One of the worries as house prices began their now three-year plunge back in 2007 was the affect of falling values would have on budgets of cities and other local governments, which rely heavily on property taxes. Well it turns out, property tax revenue is far more resilient than people thought.
The fact that property taxes held up despite the housing bubble bursting has ramafications for tax policy in general. Here's why: First of all, it is just interesting that property taxes held up despite the real estate recession. In fact, property tax revenue has held up better than any other of the general ways states and local governments raise money. Sales and individual tax revenue were both down sharply in 2009. Property taxes, on the other hand, were up. Why is that? The professors said that was mostly the result of the fact that local governments tend to offset declines in house prices by raising taxes. Or they just don't lower the assessment on houses when property values fall, which essentially does the same thing as raising tax rates. Here's why I find this interesting and why it says something about the tax code in general. A favorite argument of people who believe we should cut taxes or are against taxes in general is that higher tax rates don't produce higher tax revenue. In fact, they often argue that higher tax rates cause revenue to drop because as rates get higher people put more energy into dodging taxes, either through loop-holes or just working less, or being less productive. Well with the test case of property taxes, that seems to be not how things work out. In fact, higher rates did seem to have a positive affect on property tax revenues. Raise taxes and you will get more government revenue. The question is how high did those rates have to go to get that positive affect. The tax-haters argue that that is their point. No matter how high you raise the rate you don't get much more. Eventually we will be at a 90% tax rate, and no one will want to own or do anything. Well if you look at the states individually, most didn't have to raise their rates very much to generate more property tax revenue. If you look at California, Ground Zero for the housing crisis, the state's small mandated property tax increase was enough to keep revenue stable. Again, people will say that local property taxes are not a good study of tax policy. City governments game assessments and set tax rates to a level that they know will generate the right amount of income to match spending, or at least come close. OK. But maybe that's what we should do on a national level. Instead of keeping our income tax rates the same level every year, and trying to change spending around to reflect that. Maybe income tax rates should float based on the government's spending needs. Deficit commission, the ball is in your court. Five Filters featured article: The Art of Looking Prime Ministerial - The 2010 UK General Election. Available tools: PDF Newspaper, Full Text RSS, Term Extraction. |
| Property tax bills to have new look Posted: 27 May 2010 01:41 PM PDT
By Nancy Bowman,
Contributing Writer
3:53 PM Thursday, May 27, 2010
TROY — Outsourcing Miami County property tax bills should result in an easier-to-read document and several thousand dollars in savings. Pat Quillen, county treasurer, said proposals from two vendors were reviewed on the road to selecting SmartBill to process about 31,000 county property tax bills. The company handles property tax billing for 43 of the state's 88 counties, she said. The new bills will be delivered to property owners in June, with payment due in July. The vendor will print and sort bills by address instead of by name, as was done by the county for years. SmartBill also will capture addresses that appear to be the same — for example 10003 N. Market St., Troy, and 10003 North Market Street, Troy — and send them to the treasurer's staff to review and consolidate in mailings, where possible. The switch is expected to reduce complaints by owners of more than one property about getting separate bills for properties. Bills previously were printed, folded by machine and then sorted by hand by treasurer's office staff. The process also will eliminate stuffing bills by hand, obviously "real labor intensive," Quillen said. "I think it is going to be so much more efficient," she said. A good number on the amount the county will save won't be available until the first bills are sent by the company. Quillen, who was appointed treasurer by county Republicans following last summer's retirement of Lydia Callison, said the decision to investigate outsourcing came as a result of the county commission office looking for ways to save on postage. Commission President John "Bud" O'Brien encouraged Quillen to check on savings available from using a vendor. SmartBill estimates a cost of 45 cents per piece, where the county was spending 41.4 cents per piece on postage alone. All costs will be covered under the contract through the treasurer's office. Before the auditor's office paid for bill paper and printing, the treasurer's office for envelopes and the commissioner's office for postage. The bills will have somewhat of a different look. They will include a line with "balance due" as opposed to the old bills that listed the one-half year amount due along with the full year's taxes. "I think this will be a lot more user friendly," Quillen said. The office also is investigating an online payment system. O'Brien said the commission was pleased Quillen was able to move forward with outsourcing, which will help ease the financial burden on the county general fund budget for postage and printing. Five Filters featured article: The Art of Looking Prime Ministerial - The 2010 UK General Election. Available tools: PDF Newspaper, Full Text RSS, Term Extraction. |
| College schedules public meeting on property tax rate Posted: 28 May 2010 12:39 PM PDT Sponsored by: Five Filters featured article: The Art of Looking Prime Ministerial - The 2010 UK General Election. Available tools: PDF Newspaper, Full Text RSS, Term Extraction. |
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